Which Consumer Staples ETF Reigns Supreme: VDC or FSTA?

Vanguard Consumer Staples ETF (NYSEMKT:VDC) and Fidelity MSCI Consumer Staples ETF (NYSEMKT:FSTA) They look almost interchangeable in terms of cost, yield, and sector exposure, but VDC stands out for its larger assets under management (AUM).

Both funds aim to provide investors with broad exposure to the U.S. consumer staples sector, tracking nearly identical baskets of stocks using passive, index-based strategies.

For those considering a defensive allocation, VDC and FSTA offer similar approaches, but some subtle differences may tip the scales depending on your priorities.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-year return represents total return over the trailing 12 months.

The ETFs' expense ratios are nearly identical, with FSTA being slightly more affordable at 0.08% versus VDC’s 0.09%. Meanwhile, their dividend yields are very similar, with FSTA holding a slight edge at 2.3% versus VDC's 2.2%.

Performance & risk comparison

What's inside

VDC targets the consumer staples sector using a full replication strategy whenever possible and a sampling approach when necessary.

With 103 holdings and a fund age of 21.8 years, it provides broad exposure to household names. Its top positions are Walmart (NYSE:WMT), Costco Wholesale (NASDAQ:COST), and Procter & Gamble (NYSE:PG), reflecting a heavy tilt toward large-cap consumer defensive stocks.

Sector allocation is 98% consumer defensive and 1% consumer cyclical.

FSTA closely matches VDC in terms of sector weightings (98% consumer defensive, 1% consumer cyclical) and top holdings, which include Costco Wholesale, Walmart, and Procter & Gamble.

It holds 104 stocks and similarly avoids any specialty tilts or quirks, offering a classic, broad-based consumer staples portfolio.

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Foolish take

The Vanguard Consumer Staples ETF and the Fidelity MSCI Consumer Staples ETF are two very similar investment vehicles.

Their top ten holdings are virtually identical. Not only are the stocks ranked in the same order by each fund, but they also have very similar weightings across both ETFs.

That said, there may be tiny differences that'd cause an investor to choose one over the other.

Fidelity's 0.01% lower expense ratio and 0.1% higher dividend yield are relatively minor, but could add up over the long haul, especially for investors managing $100,000 or more in assets.

On the other hand, VDC offers better liquidity and may be a better option for investors looking for the best pricing possible or for short-term traders looking to make frequent transactions.

Ultimately, both ETFs are excellent options that provide exposure to a sector that should prove to be undeniably steady. These ETFs could serve as an excellent bedrock holding for any conservative or well-diversified portfolio.

Glossary

ETF: Exchange-traded fund; a basket of securities traded on an exchange like a stock.
Expense ratio: Annual fee, as a percentage of assets, that investors pay to own a fund.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Full-replication strategy: A method where a fund holds all securities in its index in the same proportions.
Sampling approach: A method where a fund holds a representative sample of an index, not every security.
Consumer staples sector: Industry segment including companies that produce essential products like food, beverages, and household goods.
Consumer defensive: Companies whose products are always in demand, regardless of economic conditions.
Consumer cyclical: Companies whose sales are sensitive to economic cycles, such as retailers or luxury goods.
Index-based strategy: Investment approach where a fund aims to track the performance of a specific market index.

Josh Kohn-Lindquist has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.